Friday, June 23, 2017

The Problems With A New Study On Seattle's $15 Minimum Wage

By Michael Saltsman in Forbes.
"The headlines were ebullient: "Minimum Wage Increase Hasn't Killed Jobs in Seattle." So said a report from a team of researchers affiliated with the University of California-Berkeley, timed for the three-year anniversary of the law.

Seattle Mayor Ed Murray conveniently had an infographic designed and ready to go for the study's release. His office excitedly tweeted that the policy had "raised food workers' pay, without negative impact on employment," linking to an uploaded study version on the Mayor's personal .gov website rather than a University domain.

The Mayor's enthusiasm was understandable: The report "was prepared at the request of the Mayor of Seattle," according to the authors--apparently as a public relations prop. Less clear is why the study was done in the first place.

The City of Seattle was already funding a highly-qualified, unbiased research team at the University of Washington to do such a report. The team includes a roster of impressive researchers from a wide variety of backgrounds--ranging from Jacob Vigdor, who is a professor at the University and an adjunct fellow at the Manhattan Institute, to Hillary Wething, who was formerly at the union-backed Economic Policy Institute.

The UW reports on Seattle's $15 experiment had something for everyone. Unfortunately for the Mayor's office, their conclusions on the early stages of Seattle's $15 wage experiment were not uniformly positive. The Washington Post reports:

    The average hourly wage for workers affected by the increase jumped from $9.96 to $11.14, but wages likely would have increased some anyway due to Seattle's overall economy. Meanwhile, although workers were earning more, fewer of them had a job than would have without an increase. Those who did work had fewer hours than they would have without the wage hike.

Nuanced conclusions like this one don't lend themselves to celebratory press releases like the one the Mayor's office put out yesterday. Enter the Berkeley team, which always arrives at the same positive conclusion on minimum wage no matter the number:

In their view, a higher minimum wage is always a good thing.

In an expose published last year, the Albany Times-Union used emails obtained via public records request to explore the motivations of the Berkeley team:

    The Times Union was recently provided hundreds of pages of emails among minimum wage advocates, Jacobs and other Berkeley academics, demonstrating a deep level of coordination between academics and advocates....

    The Berkeley Labor Center has done at least six other studies on the minimum wage in California municipalities, all showing that a wage increase would be beneficial. In fact, Jacobs could not name a study conducted by Berkeley that said raising wages would have an overall negative impact. ...

Given this history of identical results, it's not surprising that the Murray administration in Seattle was anxious to have a copy of the predictably-positive Berkeley report to tout on the third anniversary of its minimum wage law.

Yet the anecdotal evidence in Seattle backs up the empirical data provided by the UW team. Local restaurant owners of establishments such as Louisa's Cafe and z Pizza have shut down, citing the cost of the minimum wage law as a factor. Karam Mann, a franchisee who owns a Subway location with his wife Heidi, has cut his staffing levels from seven employees down to three.

The wage floor is still rising in Seattle, and there are more chapters to write on the city's minimum wage experiment. But if accuracy if the goal, the Berkeley team is not the right choice to author them." 

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